The Chancellor has today (24 September 2020) announced an additional package of support for businesses, following the Prime Minister’s announcement earlier this week about additional lockdown measures coming into force. We summarise some of the key announcements for businesses like yours.
Changes to government-back business loans
The Chancellor announced a “pay as you grow” scheme for businesses that have taken on loans backed by the government guarantee, known as CBILS (Coronavirus Businesses Interruption Loan Scheme). The Government’s ‘Bounce Back’ loans can now be extended from six to ten years, nearly halving the average monthly repayment. Businesses can also move to interest only payments or in some instances suspend payments for up to six months. There will also be a new loan scheme in January, but details were not provided.
New job support scheme to replace ‘furlough’
The Chancellor confirmed that the current furlough scheme will end at the end of October as planned, but announced a new ‘job support scheme’ which would contribute to wage costs for staff returning to work on reduced hours. The new scheme will run for six months. The image below explains how the scheme will work.
Changes to VAT
VAT for hospitality and tourism businesses is currently reduced from 20% to 5%. The Chancellor confirmed that this 5% VAT rate will be extended until March 31 2021. Find out more about support for businesses in the retail and hospitality sectors.
The Chancellor also extended the terms on which businesses can defer their VAT payments. Business who chose to defer their VAT payments for 2020/21 were due to pay the full amount next March, but they can split the payment into smaller payments over the next financial year.
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